If you want to get rich, you have to go broke first. Maybe you’ll have to go broke several times.

It seems this step is an invariable requirement in the acquisition of wealth. The market masters of the early 1900’s went broke. Speculators like Livermore, Keene and Wyckoff.

Even Robert Prechter of Elliott Wave International has stated as much in his interviews; He puts it a little differently:

‘Be sure to lose your first fortune(s) early … so that you have time to recover.’

Note his inference on ‘recovery’. Winners recover. Losers recount.

I have an acquaintance that wants to begin trading in earnest; searching to gain significant wealth. He’s already had a successful career having been a weapons officer in the Air Force and later, an aerospace engineer.

Now, he asks me market questions, the answers to which require that he invest countless hours (and possibly years) of study and dedication to learning the craft.

After a recent barrage of such questions and in a sense of exasperation, I simply said:

“If you want to learn about the markets, the best way to do that is to start losing money.”

How much better it would have been for my own firm to have understood that fact. We would have set up at least three separate trading accounts … the first two of which were expected to go to zero.

If by that time (the third account), a concise plan had not been developed, well then, one can at least decide to exit the profession altogether having lost only 2/3rds of one’s wealth instead of it all.

For there to be a lasting blow‑off capitulation up‑thrust (and reversal downward) in gold, the stage needs to be set.

Reports like the one at this link help to set the stage for investor panic.

Personally, I appreciate Greg Hunter’s weekly wrap up and have watched it for years. Mr. Hunter was an investigative reporter, unique in his style and ideas … as is typical of someone with an edge or focused capabilities, he found himself on the receiving end of a corporate pink slip; or as he put it, ‘We have chosen not to renew your contract’.

On the flip side and by definition, Mr. Hunter’s guests are part of the masses; they are in the public eye. In that case, their ideas are public and mainstream. In the final outcome, the total of all mainstream and public (trading) ideas must result in loss.

Will this time be different? Will gold and silver see a blow‑out move to the upside and keep on going? Certainly, it could happen. Anything can happen.

As has been reported previously, sentiment indicators do not favor a long term sustainable upside move. There is too much bullishness.

What’s more likely, is some kind of penetration above known resistance with the attendant mass hysteria about “This is it!”

If and when that happens, we’ll be on the sidelines monitoring volume and price action … with an eye on going short. If so, we’ll be positioned for a potentially dénouement down move in the precious metals and mining shares.

For technical research and analysis of the precious metals and other sectors, please visit our parent site at ten-trading.com

While the market looks dull, it’s actually coiled up like a spring ready for its next move.

The best analysis we have found thus far, is the quote below. The analyst states that price action looks like a pendulum swinging down to rest. We’re in a brief period of dull market activity.

“These dull periods often occur after a season of delirious activity on the bull side. People make money, pyramid on their profits and glut themselves with stocks at the top. As everyone is loaded up there is comparatively no one left to buy, and the break which inevitably follows would happen if there were no bears, no bad news or anything else to force a decline.”

Indeed, it’s an excellent assessment of the price action in the S&P as seen below.

The problem is, that analysis was not written this past Thursday or Friday. No, that assessment was written over a century ago in Wyckoff’s seminal text: Studies In Tape Reading.

To understand the present, we need to understand the past: especially with stock market activity.

The human condition has not changed since inception. There’s no new ‘quant’ program that has it all figured out. If that were true, price action would look different. We would not be able to use century old techniques to call market turns to-the-day (repeatedly) as detailed here and here.

The only media mention of Wyckoff that we’ve ever seen is a brief reference by Linda Bradford-Raschke (former pit trader) at this link. At time stamp 0:36, she mentions Wyckoff. It almost slips by for those not attune.

If the pit traders know where to go for guidance, should we not do likewise?

As we come forward one hundred years, we see the S&P has coiled itself like a spring. For the past seven-plus years, it’s been delirious bull market activity as Wyckoff stated.

Traders and investors have continued to gorge or force themselves on every last up-tick. The market has now come to rest apparently unable to move higher.

What new catalyst will come to the fore to launch to higher levels? It could happen: However, the most probable resolution of this formation is a move to the downside.